/ Shahbaz, Muhammad; Lean, Hooi Hooi.

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The call for sustained growth follows from the insight that overcoming obstacles to human development mostly requires some constancy in the availability of funds. Escaping from poverty traps, for example, usually requires actions implemented with a time horizon of several years, as an evaluation of the progress in achieving the Millennium Development Goals by the United Nations Development Programme (UNDP) has confirmed. Sustained growth usually does not evolve as an outcome of monetary expansion or government spending programmes. It rather requires structural changes, such as technological innovations, formation of know-how and knowledge, transformation of institutions or . Such changes can be self-reinforcing and thereby stabilize growth over a longer period of time, as the various models of endogenous growth theory have shown. In practice, conditions for sustained growth are often set by future-oriented policies targeting managed consumption, a build-up of savings and investment, particularly public investment in infrastructure .

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The long run relationship results as shown in , suggest the existence of a long-run relationship for the majority of pairs of dependent variable at 0.01, 0.05 or 0.10 levels. It is very clear that the long run relationship exists when Y, IN, AG and O and S are dependent variables but for SS dependent variable, the F-statistics lies in between the range of lower and upper bound (means inconclusive) and T-statistics lies below the lower bound critical values (means no cointegration). Critical values of F-statistic are taken from study and t-statistics are taken from study. Both critical values are presented together in .

The EKC curve shows that environmental degradation first increases with increasing income per capita, but that after a certain point in increasing income per capita, environmental degradation tends to diminish (). Though environmental degradation rises quickly with a steep slope in the curve, its reduction gives a moderate slope. However, it gives a hill shaped curve by taking income per capita in X-axis as an independent variable and environmental degradation in Y-axis as a dependent variable. When there is no turning point in income per capita for any pollutant, the curve simply represents a straight line ().

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Bangladesh is one of the thirteen countries that have the potential to grow faster in their economy (). It has more than tripled its GDP in real terms and food production has increased three-fold (). Observing the trend of last twenty years, it is assumed that the country will become a middle-income country by 2020. In three out of the last five years, the economy has grown at 6% and over ( - ). The economic survey of Bangladesh () states that though a decrease in growth rate has been observed in some years, growth is continuing nonetheless (). For a developing country with this GDP growth rate, Bangladesh is defying the impact of the global economic fallout () and ranked 68th in World ranking in the CIA World Fact Book (). ADB () reported that the global center for economic activity is already being shifted to India, China and other large emerging economies, and that Bangladesh must make all efforts to capitalize on its comparative advantages to benefit from this global paradigm shift ().

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In June 2009, the population of the country was about 156 M, with a growth rate of 1.3%. Seventy-seven percent of the total population lives in rural areas (). Bangladesh is a country with a developing economy. Economic growth influences urbanization of rural areas in the developing countries (). In Bangladesh, total urban population in 2009 was 27.6% and it has been projected to reach at 56.4% in 2050 (). It shows a decrease in rural population in 2050. Average annual rate of change of urban population in the period 1975-2009 was 5.15%, which has been projected to reduce at 2.52% in the period 2009-2050. Whereas, average annual rate of change of the rural population has been projected to -0.47% in the period 2009-2050. The rate of urbanization in 1975-2009 was 3.03%, which has been projected to reduce at 1.75% in the period 2009-2050 (). With the increase of urban population and the reduction of rural population along with the reduction of urbanization rate in the period 2009-2050, show a long run effect of retarding deforestation. DeFries et al. () also support this phenomenon. It has been recently observed in the neighboring country, India (). However, environmentalists are concerned about the present increasing environmental degradation in Bangladesh. The country is under severe threat of climate change and forest biodiversity loss. According to the IPCC and Bangladesh Climate Change Strategy and Action Plan 2008 (, ), Bangladesh will be among the worst-affected countries of climate change in the world. The macro-economy in Bangladesh can show the movement of environmental degradation through the EKC. The following sections aim at discussing this.

The main objective of the research is to model the dynamic relationship between agricultural sector growth and other economic sectors growth (i.e., industrial, services and oil and gas sector growth) and economic growth of Iran; using the advanced co-integration technique (ARDL) for the period 1959-2010. The economy of Iran is a transition economy with a large public sector and an estimated 50% of the economy is centrally planned. With respect to natural endowments, Iran is the second largest oil producer following Saudi Arabia among the Organization of the Petroleum Exporting Countries (OPEC) members and also posses the second largest natural gas reserves globally, following Russia. Major part of total exports (80%) and government revenue (60%) in 2010, is dominated by oil and gas sector products (). Economic activities are primarily dominated by industrial sector activities, including oil and gas, petrochemicals, steel, textile and automotive manufacturing which represent about 45% of the GDP. The services sector accounts for another 43% of the GDP and finally, Agricultural sector accounts for the rest 12% of the GDP and continues to be one of the economys largest employers; representing one-fifth of all jobs (). At present Irans territory consists of 30 provinces which are governed by a local centre, usually the largest local city. Provincial authority is headed by a governor (Ostandar), who is appointed by the Minister of Interior, subject to approval of the cabinet. Regional planning is directed through the budgeting system which is annually proposed by the central government and approved by the parliament ().

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The long run relationship between each pair of variables under consideration is tested by using the Autoregressive Distributed Lag (ARDL) approach to co-integration (). The ARDL method of cointegration is concerned by estimating the error correction model as depicted in :

Published to Oxford Scholarship Online: September 2006

Considering the hypothesis along with the global observation of EKC and the growth trend of the national income of Bangladesh, it is now clear that Bangladesh is going to face a severe threat of environmental degradation in the upcoming years or decades. From the studies of EKC in the developing countries, it is assured that environmental complications will be relentless, until the peak point is achieved. However, economic growth and development are also important. The prime task will be to curb the upcoming environmental threats. The urbanization trend of Bangladesh suggests that retarding deforestation cannot be expected immediately. The literature review of the observations of the EKC hypothesis for deforestation in many regions and countries shows that to reach the turning point, Bangladesh needs to go far at its required income per capita. Some cases in which an N-shape EKC existed were also observed. In these cases, halting deforestation occurs for the time being and a subsequent increase in income per capita again degrades the forests. However, if we are to wait for that standard turning point, the forest ecosystem in Bangladesh may be irreversibly degraded. It would be best to follow the alternative routes ( and ). Oestreicher et al. () conclude that several surveillance measures with greater funding and proper governance are critical to slowing deforestation. Santilli et al. () and Culas () confirm that adequate funding of programs for enforcing environmental legislation, finding alternative livelihoods for the forest-dependent people, and alternatives to massive forest clearing and capacity building for dealing with the remote forest regions are critical to reducing deforestation. Over-population indirectly results in deforestation and forest degradation due to poverty (). Some economic mechanisms can transform this poverty and peoples’ attitude, which can in turn reduce deforestation. To this end, this paper suggests that Clean Development Mechanism (CDM) and Reducing Emissions from Deforestation and forest Degradation (REDD+) can work towards forest transition. However, this paper assumes that CDM and REDD+ are only parts of a whole forest transition process in Bangladesh, which this paper focuses on. These two mechanisms can be useful to construct an alternative path in the EKC in Bangladesh. The following sections brief on these mechanisms.